[BUG] CoworkVMService crashes with ExitCode 1066 "Incorrect function" on Windows 11 Pro 25H2 Build 26200 | service fails during early initialization, all user-side fixes exhausted

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

CoworkVMService immediately crashes with ExitCode 1066 ("Incorrect function") on every startup attempt. The VM bundle downloads and validates successfully ("All files ready"), smol-bin.vhdx copies successfully, but the service binary (cowork-svc.exe) fails during early initialization before any HCS/network operations occur.
This behavior is identical across Claude Desktop v1.1.7714.0 and v1.1.8359.0.

What Should Happen?

CoworkVMService should start successfully, create the NAT network, boot the VM, and establish API connectivity.

Error Messages/Logs

Cowork UI:

Failed to start Claude's workspace — VM service not running. The service failed to start.

System Event Log (Event 7024):

The Claude service terminated with the following service-specific error: Incorrect function.

cowork_vm_node.log:
[error] [VM:start] Startup failed: Error: VM service not running. The service failed to start.

Steps to Reproduce

1. Install Claude Desktop v1.1.8359.0 on Windows 11 Pro 25H2 (Build 26200)
2. Ensure Hyper-V, Virtual Machine Platform, and Windows Hypervisor Platform are all enabled
3. Confirm vmms and vmcompute services are running
4. Open Claude Desktop and navigate to the Cowork tab
5. Wait for VM bundle to download completely (~2.2 GB)
6. Observe "VM service not running. The service failed to start." error
7. CoworkVMService shows State: Stopped, ExitCode: 1066

Claude Model

None

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

v1.1.8359.0 (MSIX)

Platform

Other

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

Extensive Troubleshooting Performed (all failed)
The following fixes were attempted systematically. None resolved the ExitCode 1066 crash:

1. Enabled Windows Hypervisor Platform — was initially disabled; enabled and rebooted. All three virtualization features confirmed enabled.
2. Full VM bundle deletion and re-download — deleted %APPDATA%\Claude\vm_bundles multiple times. Bundle re-downloads successfully every time, checksums validate.
3. Manual sessiondata.vhdx creation — created via New-VHD -Dynamic -SizeBytes 10GB as suggested in other issues. No effect.
4. DCOM permission fix — Event 10016 was logged for CLSID {2593F8B9-4EAF-457C-B68A-50F6B8EA6B54} / APPID {15C20B67-12E7-4BB6-92BB-7AFF07997402} (PerAppRuntimeBroker). Took ownership of the registry key, granted Local Launch and Local Activation to user account. DCOM errors stopped, but service still crashes with ExitCode 1066.
5. NTFS compression check — verified VHDX files are not compressed (Attributes: Archive only), despite system-level compression being enabled.
6. Full MSIX uninstall and reinstall — Get-AppxPackage -Name "Claude" | Remove-AppxPackage, deleted vm_bundles and claude-code-vm directories, reinstalled from claude.ai/download. Same crash.
7. Updated to latest version — upgraded from v1.1.7714.0 to v1.1.8359.0. Same ExitCode 1066.
8. Manual service start — Start-Service CoworkVMService fails immediately.
9. Firewall rules verified — Claude has both inbound and outbound Allow rules.
10. Connectivity verified — Test-NetConnection api.anthropic.com -Port 443 succeeds (TcpTestSucceeded: True).

DCOM Error (resolved, but didn't fix the crash)

Prior to the DCOM fix, this appeared in the System event log:
Event 10016: The application-specific permission settings do not grant Local Activation permission 
for the COM Server application with CLSID {2593F8B9-4EAF-457C-B68A-50F6B8EA6B54} and APPID 
{15C20B67-12E7-4BB6-92BB-7AFF07997402} to the user MNR-XPro\moneerk SID (...) from address 
LocalHost (Using LRPC) running in the application container 
Claude_1.1.7714.0_x64__pzs8sxrjxfjjc SID (Unavailable).

After granting permissions via Component Services, this error no longer appears, but the service still crashes identically.

Assessment

This appears to be a bug in cowork-svc.exe itself failing during early initialization within the MSIX sandbox on Windows 11 Pro 25H2 (Build 26200). The service cannot be launched directly for debugging due to MSIX restrictions. All user-configurable system prerequisites have been verified and fixed. The crash occurs before any VM boot, network creation, or API connectivity attempt.